Study: Mass. Bill Would Raise Drug Costs, Make Companies Divulge Proprietary Info

Published May 3, 2016

Requiring Massachusetts-based pharmaceutical companies to disclose their pricing methodologies and proprietary information would discourage drug development and drive up health care costs, a new study by the Boston-based Pioneer Institute concludes.

The Pioneer Institute published “Are Drug Prices Driving Healthcare Cost Growth?” on April 7 in anticipation of an April 11 hearing by the state legislature’s Joint Committee on Health Care Financing regarding Senate Bill 1048, titled “An Act to promote transparency and cost control of pharmaceutical drug prices.”

“Competition on price, not public disclosure of proprietary information on cost and operations, is what eventually drives down prices in every market sector,” the report states in a section enumerating facts it says proponents of SB 1048 ignore. “Policymakers should obtain data on drug expenditure trends using multi-year, rebated data before considering policy changes that could affect drug development,” states one of four recommendations for lawmakers.

Prices Inform Consumers

Pioneer Institute Executive Director Jim Stergios says private companies, in the pricing of their products, already give the public the relevant information consumers need.

“To function well, the private sector must inform the public with prices,” Stergios said. “In a free-enterprise system, other companies who believe they can provide a higher quality product or produce a similarly effective product at a lower price will enter the marketplace.”

“The report is accurate,” said David Tuerck, executive director of the Beacon Hill Institute at Suffolk University in Boston.

“There would be no miracle drugs if the drug companies couldn’t charge prices high enough to recover these costs,” Tuerck wrote in a Beacon Hill Institute newsletter in 2000.

Michael McGrady ([email protected]writes from Colorado Springs, Colorado.

Internet Info:

Jim Stergios and Greg Sullivan, “Are Drug Prices Driving Healthcare Cost Growth?” White Paper Series, The Pioneer Institute, April 7, 2016:

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